PHILADELPHIA — A retail property located in a prominent spot in Philadelphia’s Central Business District has traded for the first time in more than 20 years.
The unassuming building at 33-37 S. 16th St. sits directly across from Liberty Place and had been owned by Carlos Cortinas of Cortinas Investment Group Inc. The 10,000-square-foot structure was bought for $6.5 million by a partnership involving MM Partners, a Philadelphia real estate company known for its redevelopment work in the Brewerytown neighborhood of the city, Bluevista Properties and Stolar Capital.
MM Partners had looked to expand into Center City and diversify outside of Brewerytown.
“We loved the location. It’s the busiest corner in Center City Philadelphia according to Center City District,” said David Waxman of MM Partners. “It’s also a very interesting Mid-Century building that offered a value add opportunity because we could back fill it with new tenants. And commercial buildings like these in the core of Center City simply don’t trade very often so to get our hands on one made a lot of sense as a long-term hold.”
Since these properties don’t regularly change hands, sometimes everything needs to align before an owner decides to make a move.
“The timing was right for Cortinas to sell and the market was right to sell,” said Josh Nadel of MPN Real Estate, who represented both sides of the transaction.
Cortinas had bought the building in 1994 for $900,0000 and operated a digital and laser imaging company called PPI from it. He eventually sold the printing business and relocated to Florida where he retired. The ground floor had been occupied by AT&T Mobile for 15 years but just last month, the telephone service provider did not renew its lease and moved to 15th and Walnut streets, where it would directly compete with a nearby Verizon store.
“There was now a vacancy in the most valuable space of the building,” Nadel said. “Rather than re-tenant the space, Cortinas put the building for sale.”
The property was put up for sale for $6.5 million and within three weeks of hitting the market, two offers at the asking price were made, Nadel said.
The building had a lot going for it beyond its prime location, according to Nadel. Among its features are that it has 50 feet of frontage along 16th Street and great visibility. It’s considered a “gateway” property to the retail district of 16th and Chestnut streets and it’s zoned CMX-5, which allows for the potential for future development.
The zoning did play into Waxman and his partners’ decision to buy, but there’s no movement to move ahead with a new project at this time.
“We will put in high quality new tenants and own a great asset with strong cash flow,” Waxman said. “We control our own destiny here as this location is only going to keep getting better and better and the Philadelphia market, particularly retail, just continues to blossom.”
The property will allow a retailer entering the market to make a statement, said Scott Benson, a retail broker with Metro Commercial Real Estate.
“It’s highly visible with great frontage,” he said.
One of the interesting aspects of this part Center City’s real estate market is that the retail scene changes block to block, according to Lars Kerstein, also of Metro. For example, in the 1500 block, there’s a Popeye’s, Dunkin’ Donuts and Five Guys; the 1600 block has a Uniglo and J. Crew; and the 1700 block has Sephora and Nordstrom Rack.
“There’s a big difference being on the 1500, 1600 and 1700 block and retailers are selective in how they want to enter the market,” Kerstein said.
Tenants will be drawn to the space though getting the right type of tenant is key. There are a number of users who could occupy the space in that area including fitness tenant or another boutique shop, Kerstein said. “This could be a restaurant,” he said. “There may be a few financial institutions on Market Street and if they have a lease coming up, may consider this.”
Natalie Kostelni, Reporter
Philadelphia Business Journal